NEECHEI GEAR PIVOTING IN AN ABORIGINAL START Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

NEECHEI GEAR PIVOTING IN AN ABORIGINAL START Case Solution

RECOMMENDATION:

Based on the decision criteria Kendal Netmaker should adopt option no 2 i.e. to find a business partner and focus on promotional and marketing activities. The investment in business will increase because of additional partner which could be used for promotional activities and product diversification. Within one month, both partners should allocate a distribution of work in a way that revenue increasing activities can be focused. Within 2 months, diversified product categories should be defined. Within 6 months, promotional and marketing strategies should be implemented. Within 12 months through these activities, if the revenues are increased then both the partner should focus on hiring experienced sales managers which will further increase the revenues. Within 24 and 36 month company should expand its business across Canada with upstream line of operation and should focus on expanding internationally.

CONTINGENCY PLAN:

If the plan does not work i.e. if the revenues are not increased by adopting the option one then both the partner should go for option 3 which is hiring of the experienced sales manager and both the partner should focus on promotional and marketing activities to obtain market capitalization with increased recognition of their brand to companies who are targeting the Aboriginals and mainstream market segment.

EXHIBITS:

Exhibit 1- SWOT Analysis

Strengths

· Targeting specific segment.

· Owner belongs to the market segment.

· Owner is a motivational speaker of the community

· Aboriginal population growth is increasing.

Weaknesses

· Low revenues.

· Cost consideration in hiring skilled professionals.

· Less time to promote brand.

Opportunities

· Increasing population of first nation community

· Product diversification.

· Brand promotion.

SO- Leverage (CRITICAL OPPORTUNITY)

· Adopt different marketing and promotional activities to increase the revenue of business so that different outlets could be placed in different region of the companies

WO- Constraints

· Investment is required in business to for promotional activities and product diversification which could be met additional partner

Threats

· Increased rivalry.

· Established brand.

ST- Vulnerabilities

· The company is only exposed to specific market niche.

WT- Problems (CRITICAL ISSUES)

· To avoid external market changes, Company should focus and plan it strategy to survive for 2 years.

Conclusion: Company should focus on market capitalization strategies to gain market share and increase its revenues. This increment in revenues will help the company to further open outlets in dense regions of the country where product of the company is not available.

Exhibit 2- Porter's 5 Forces

Threat of new entrants (Moderate)	The threats of new entrants are quite high for this industry. The low cost nature of starting a business in this sector of industry with high market segmentation opportunities makes the entry of new entrants quite high.
Threat of substitutes (High)	Threats of substitute is also high. The market for apparel industry is highly fragmented with many low cost brands as well. The differentiation of the product with regards to changing fashion in lifestyle is to be adopted when change in fashion occurs to remain competitive and differentiated.
Bargaining power of the buyers (High)	Threats of substitute is also high. The market for apparel industry is highly fragmented with many low cost brands as well. The differentiation of the product with regards to changing fashion in lifestyle is to be adopted when change in fashion occurs to remain competitive and differentiated.
Bargaining power of the suppliers (High)	The bargaining power of the supplier is quite low in this industry. The availability of producers and suppliers with drop ship supply chain management procedures of low cost increased the options for wholesalers and retailer to choose from different buyers around the world.
Rivalry among the existing players (High)	Rivalry among the competitors is also quite high because of similarity of product and ongoing fashion. The product is only differentiated on the basis or brand name and quality. To maintain these competitors usually try to remain ahead of their competitor which makes high rivalry among competitors.

Conclusion: The apparel industry is highly competitive with many producers and wholesalers with established brand are prevailing in the market. This implied that company should focus on brand promotional and marketing strategies to establish its brand.


Exhibit 3- Financial Ratios Analysis
	2013	2014

Net Sales	558249.09	374319.83
COGS	203716.2	155360.18
Gross Profit	273,934.10	218959.65
Total Expenses	246661.83	189709.98
Net Income	106536.37	29249.67


Cost of Goods Sold/ Net Sales	36%	42%
Gross Profit Margin	49%	58%
Total Expenses/ Net Sales	44%	51%
Net Income Margin	19%	8%

Conclusion:

These ratios conclude that due to change in business model with heavy costs and changed business strategies the company had suffered from less revenues and more focused is needed for brand and marketing promotion.

Exhibit 4- Decision Matrix

2- Does meet criteria 1- Close to criteria 0- Does not meet criteria

FACTORS	OPTION 1	OPTION 2	OPTION 3
SALES	2	2	2
COST	2	2	0
PROMOTION ACTIVITY	1	2	1
TOTAL SCORE	5	6	3

Conclusion:

According to decision criteria and analysis the company should implement option 2 with highest score because of its attractiveness in increasing revenues, managing costs and promotional activities. Selection of option 2 will enhance the capability of Kendal Network to promote business and increase revenues......

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